Help to buy and gifting money query

quattros

One of my Siblings is looking to purchase their first home and is on the Help to buy scheme , If My parents was to help with a considerable amount of money towards the house is it as straight forward as that or are their penalty’s involved ?

Keep_pedalling

quattros said:

One of my Siblings is looking to purchase their first home and is on the Help to buy scheme , If My parents was to help with a considerable amount of money towards the house is it as straight forward as that or are their penalty’s involved ?

There are no penalties associated with gifting part or all of a deposit. If they are talking about a loan then that would be unlikely to be accepted by their mortgage company.

If your parents combined estate is likely to fall into IHT territory then making substantial gifts to children is a good thing, provided they stay alive for the following 7 years.

NotReallyNorthern

^^^ agreed with the above regarding IHT. It's also worth asking your potential mortgage lender or a broker how they feel about gifted deposits. I think during the current situation they want to know but I don't think you are penalised for it. Be up front about it though.

quattros

Keep_pedalling said:

quattros said:

One of my Siblings is looking to purchase their first home and is on the Help to buy scheme , If My parents was to help with a considerable amount of money towards the house is it as straight forward as that or are their penalty’s involved ?

There are no penalties associated with gifting part or all of a deposit. If they are talking about a loan then that would be unlikely to be accepted by their mortgage company.

If your parents combined estate is likely to fall into IHT territory then making substantial gifts to children is a good thing, provided they stay alive for the following 7 years.

Hi thanks for your reply , So my parents have sold their home and as an option the money they got are thinking of paying my Sibling towards their house , as my Sibling would be using the Help to buy scheme I didn’t know if my parents would be able to offer large amounts of money to my siblings home.

steampowered

The "help to buy" scheme is a mortgage scheme. You do not need to use the scheme just because the house is eligible for it.

If your parents are able to help your siblings scrape together a 10% or 15% deposit, your siblings will be better off taking a conventional mortgage, not a HTB mortgage.

HTB mortgages come with a higher interest rate than standard mortgages. Plus, the government owns a stake in the property. Plus, the siblings will need to pay off the HTB equity loan in a few years which will involve hassle and conveyancing fees. 

HTB mortgages are suitable for people who only have a 5% deposit and want to get onto the housing ladder, but if you can gather a larger deposit they are not the money saving option. 

kingstreet

The rate for a HTB mortgage product is considerably lower than that for an 85% product and as for 90% on newbuilds, there are practically none out there. The minimum mortgage on HTB is 25% so a 20% HTB equity loan can work with a 55% deposit although here I would agree with steampowered that the rate advantage passes back to the standard product.

AdrianC

Keep_pedalling said:

If your parents combined estate is likely to fall into IHT territory then making substantial gifts to children is a good thing, provided they stay alive for the following 7 years.

But may come back to bite if they need residential care.